It was only a matter of time. We all knew Anheuser-Busch InBev (AB InBev) would most likely get to completely own Grupo Modelo, S.A.B. de C.V. Last summer, AB InBev (the biggest beer baron in the world, currently a publicly-traded company based in Leuven, Belgium) announced it was looking to buy the 50 percent of Grupo Modelo, a Mexican beer conglomerate, home to famous American imports like Corona and Pacifico, that it didn’t already own. The U.S. government filed a lawsuit to block the merger of these two giant beer companies, saying the deal would limit competition and lead to higher prices for American consumers. Unfortunately, word has come from AB InBev that an agreement has been reached.
According to the AB InBev website, AB InBev, Grupo Modelo, Constellation Brands Inc. and Crown Imports LLC have reached an agreement in principle with the U.S. Department of Justice on a proposed resolution to the Department of Justice’s litigation challenging AB InBev’s proposed acquisition of the remaining stake in Grupo Modelo. The proposed resolution is in line with the revised transaction announced on February 14 (see three-part summary below).
In connection with this agreement, the parties and the Department of Justice have jointly approached the Court and requested an extension of the stay of the proceedings until April 23, 2013. This stay will allow the parties to finalize the details of a proposed consent judgment and the related definitive agreements and papers required for settlement. The parties stated in their filing with the Court that they expect for this to be their final request to extend the stay. Approval of the transaction, and the timing of such action, remain subject to the finalization of the relevant documentation with the DOJ and other parties, and approval by the Court.
That sounds like a lot of fancy lawyer talk. Basically, in February, AB InBev made some power moves that satiated the Justice Department. For those who haven’t been paying attention, here’s the recap:
- Last year, AB InBev announced it was looking to buy the 50 percent of Grupo Modelo that it didn’t already own.
- In January, the U.S. government filed a lawsuit to block the merger of these two giant beer companies, saying the deal would limit competition, lead to higher prices for American consumers and give AB InBev 46 percent of the domestic market.
- In February, AB InBev comes up with a solution. The company points to Grupo Modelo and its joint venture with Constellation Brands (a Fortune 1000 company that is a world leader in premium wine). The joint venture is called Crown Imports LLC, and it allows Constellation to distribute and market Grupo Modelo’s beer brands in America, including Corona Extra, the No. 1 imported beer in America. To avoid antitrust concerns, Grupo Modelo has agreed to sell its half of the joint venture to Constellation Brands. Constellation would pay $1.8 billion to take complete ownership of Crown Imports, and AB InBev agreed to give up its option to buy the rights to distribute Grupo Modelo brands in the United States.